Anarchy, state, and utopia

Capitalism and Freedom

The modern formulation of equality of opportunity emerges from discussions in political philosophy from the second half of the twentieth century beginning with Rawls (1971) and Dworkin, 1981a , Dworkin, 1981b . Equality of opportunity exists when policies compensate individuals with disadvantageous circumstances so that outcomes experienced by a population depend only on factors for which persons can be considered to be responsible. Importantly, inequality of opportunity for income exists when individuals’ incomes are in some important part determined by the educational achievement and income of the families that raised them. We review the philosophical debates referred to, commenting upon them from an economist's viewpoint. We propose several ways of modeling equality (or inequality) of opportunity, pointing out that an equal-opportunity ethic implies a non-welfarist way of ranking social outcomes. We propose that economic development should be conceived of as the equalization of opportunities for income in a country. We consider equalization of opportunity from a dynamic viewpoint, and we review popular attitudes with regard to distributive justice, showing that there is substantial popular support for an equal-opportunity ethic. We discuss the empirical issues that emerge in measuring inequality of opportunity and provide a review of the empirical literature that measures degrees of inequality of opportunity for the achievement of various objectives, in various countries.

Equality of Opportunity

This paper considers a wide class of inequality indices and identifies those which are additively decomposable. The sub-class of mean independent, additively decomposable measures turns out to be a single parameter family which includes the squared coefficient of variation and the two Theil's entropy formulas.

The class of additively decomposable inequality measures

Different beliefs about how fair social competition is and what determines income inequality, influence the redistributive policy chosen in a society. But the composition of income in equilibrium depends on tax policies. We show how this interaction between social beliefs and welfare policies may lead to multiple equilibria or multiple steady states. If a society believes that individual effort determines income, and that all have a right to enjoy the fruits of their effort, it will chose low redistribution and low taxes. In equilibrium, eff ort will be high and the role of luck will be limited, in which case market outcomes will be relatively fair and social beliefs will be self-fulfilled. If instead a society believes that luck, birth, connections and/or corruption determine wealth, it will tax a lot, thus distorting allocations and making these beliefs self-sustained as well. These insights may help explain the cross-country variation in perceptions about income inequality and choices of redistributive policies.

/pdf/fairness-and-redistribution-e8xpkgp70j.pdf

Fairness and redistribution

http://darp.lse.ac.uk/papersdb/Kolm_(JET76a).pdf

Unequal inequalities. I

Preface. Part II: Family transfers. 13. Microeconomic models of family transfers (A. Laferrere, F-C. Wolff). 14. Altruism, exchange or indirect reciprocity: what do the data on family tranfers show? (L. Arrondel, A.Masson). 15. Intergenerational altruism and neoclassical growth models (P. Michel, E. Thibault, J-P. Vidal). 16. Wealth transfer taxation: A survey of the theoretical litterature (H. Cremer, P. Pestieau). 17. The economics of migrants remittances (F. Docquier, H. Rapoport). Part III: Third sector and labor. 18. Philanthropy (J. Andreoni). 19. Donative nonprofit organizations (M. Bilodeau, R.S. Steinberg). 20. The economics of organ transplantation (E.D. Thorne). 21. Altruism, reciprocity and cooperation in the workplace (J.J. Rotemberg). 22. Reciprocity, altruism and cooperative production (L. Putterman). Part IV: The political economy of voluntary transfers. 23. Strong reciprocity and the welfare state (C. Fong, S. Bowles, H.Gintis). 24. Selfishness, altruism and normative principles in the economic analysis of social transfers (D. Blanchet, M. Fleurbaey). 25. The political economy of intergenerational cooperation (A. Cigno). 26. The economics of international aid (R. Kanbur).

Handbook of the economics of giving, altruism and reciprocity

This article presents the general structure of the question justice in society, its three polar cases which relate to the benefits from the human resources, their difficulties with Pareto-efficiency, and the solutions of these dilemma, notably for the central case where individuals a priori own only their consumptive capacities. This solution is a multidimensional maximin which leads to super-equity (no individual prefers any average of the individuals' allocations to his own). The properties of efficient super-equity are then shown: limits to the dispersion of incomes and relations with equal income, preference to all equal allocations, determination of the redistributive tax-subsidies, relations with other principles. Finally, the efficient implementation of standard ethical positions consists of the equalizing redistribution of incomes earned during a fixed duration while the other earned incomes are untaxed.

The theory of justice

This first book in English by Serge-Christophe Kolm provides an overview of his far-reaching vision of distributive justice. Kolm derives justice from considerations of rationality. Justice cannot be defined by one all-encompassing principle or set of a few principles. It has the general form of an equality of individuals' liberties in a broad sense, with different applications and specific adjustments when several liberties conflict or when everybody prefers another outcome. Kolm describes the theory of justice and presents and evaluates each of the various modern theories, principles, or criteria of justice. He shows how some complement each other, how some are unworkable, and how some could be rescued. The result is an intensive introduction to the general theory of justice for economists and noneconomists alike.

Modern Theories of Justice

Modern Theories of Justice By Serge-Christophe Kolm. Cambridge, MA: The M1T Press, 1998. Pp. ix, 525. $42.00. Professor Kolm's books and articles form one of the most important contributions to contemporary social ethics. Even though the main parts of his works were originally published in or have been translated into English, they have not received the attention they deserve. This is sufficient reason to highly recommend his Modern Theories of Justice, which contains a detailed introduction to his other books. Since the late fifties, Professor Kolm has developed a general theory of justice. He has also extensively contributed to the critical evaluation of the various theories, principles, or criteria of justice that influence economists. Professor Kolm presents his theory of justice as resulting from an application of rationality (in the sense of rational justification) to the question of global justice (what should be done in society?), that is, to the definition of the social optimum and of what is right or good in society. Briefly, this social optimum basically consists of first satisfying basic needs and guaranteeing basic rights and second allocating society's resources (including human resources) in an equitable way. The latter principle requires mixing the (somehow competing) moral criteria of equal process freedom (freedom to benefit from the results of one's acts), equal consumption, and equal satisfaction. Process freedom alone justifies free markets and no resource redistribution. Equal consumption, when combined with efficiency, requires superequity (that is, no agent would strictly prefer any convex combination of the allocations received by others to his own allocation). Equal satisfaction requires to leximin welfare levels corresponding to fundamental preferences, a (difficult) concept that allows the social observer, in particularly unjust or unequal situations, to unambiguously identify the worst-off agents, that is, the agents who should be allocated more resources. Among the different ways of mixing process freedom and equal consumption, Professor Kolm elaborated a particularly interesting intermediary case in recent contributions (recall that the whole structure of his theory, including the ideas of the maximin in fundamental preferences, income justice and superequity, unjust inequality measurement, etc., was first developed and presented in the late sixties). The purpose of this intermediary case is to equally share the benefits of possibly unequal productive capacities while letting agents individually benefit from their own consumptive capacities. The solution consists of a fixed-duration income equalization. This criterion is met when all agents in a society face a budget set having the property that by choosing a prespecified labor time (the so-called fixed duration) any agent would earn the same labor income. Professor Kolm's theory of justice also considers several reasons why the first-best social optimum could not be reached (for example, market failures) and proposes solutions to these problems (for example, social contracts, which give foundations to a theory of the state). Finally, a large part of the book is devoted to a critical appraisal of the main ethical theories influencing the development of normative economics (what justifies the title of the book), with a long discussion on utilitarianism and social choice theory. The general picture is quite impressive. Professor Kolm is not only able to discuss a long and diversified series of topics, such as the economics of poverty, the no self in Buddhism or the ideology of the French Revolution, but he also succeeds in building links among all these topics and integrating them into a unified theory. …

Serge-Christophe Kolm

Papers

Unequal inequalities. I

Handbook of the economics of giving, altruism and reciprocity

The theory of justice

Modern Theories of Justice

Modern theories of justice